Texas is preparing for a new federal food assistance policy meant to counter misspending that could cost the state millions of dollars.
The Supplemental Nutrition Assistance Program, or SNAP, sometimes called "food stamps," is a federal program that provides financial assistance to eligible low-income families to address food insecurity.
Texas will already see millions of dollars in additional administrative costs later this year when states will have to take on more of the administrative costs of running SNAP – going from an even share with the federal government to covering 75%.
For fiscal year 2024, the total administrative costs for SNAP in Texas were more than $470 million. To cover the increase, Texas would need an additional $117 million annually.
Stephanie Muth, Texas Health and Human Services executive commissioner, told state lawmakers Wednesday that's not the only policy that could cost the state more money: Beginning next year, states will pay more for SNAP benefits based on their "payment error rates," she explained, part of the federal government's effort to eliminate fraud and improper payments.
Historically, SNAP benefits are completely funded through federal dollars. But, under the federal tax and spending bill passed last year, states would be financially responsible based on how accurate their program is.
Large states, like Texas, tend to have a higher error rate, according to Muth.
Errors can include underpayment or overpayment based on mistakes made by recipients or HHSC employees.
If a state has an accuracy rate of about 94%, the program will continue to be fully funded by the federal government. States can be required to cover up to 15% of the benefit cost, adjusted annually, based on performance.
When the rule goes into effect, the federal government will be looking at the 2025 and 2026 fiscal years and going with the higher percentage.
In 2025, Texas had about a 91% accuracy rate based on preliminary data, meaning the state would be responsible for 10% of the program.
That's about $708 million annually, according to Muth.
Texas won't know its fiscal year 2026 rate until June 2027.
"That's important because that's after the legislative session," Muth said. "We will not know exactly where we stand on the error rate until after."
Muth said that could make it harder for state officials and lawmakers to plan the next state budget.
But, she said HHSC is focused on improving the accuracy rate to hopefully avoid the increased costs.
"When you look at large states, to improve your error rate, it's basically technology changes, improvements to staff training, aids for workers, doing more of those pre-certification reviews," she said.
Muth said about a third of errors in Texas are the fault of SNAP recipients, which can include someone forgetting to update the state when their income increases. She also said these can be the most difficult to address.
Most of HHSC's solutions so far have focused on employee errors.
HHSC introduced new handbooks and a statewide AI assistant for staff. The agency is adding some additional safeguards to address things that "drive common errors in cases."
Muth said there's less flexibility when administering SNAP compared to Medicaid, but there are areas where the state could change "eligibility criteria." She said the agency is looking at opportunities for "additional flexibilities" the state can ask for from the federal government.
"The takeaway is really there's not quick fixes," Muth said. "You have to attack it from multiple fronts all at the same time."
Abigail Ruhman is KERA's health reporter. Got a tip? Email Abigail at aruhman@kera.org.
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